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Methanex (MEOH) Down 18% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Methanex (MEOH). Shares have lost about 18% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Methanex due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Methanex’s Q1 Earnings Beat Estimates, Revenues Lag

Methanex recorded profit (attributable to shareholders) of $38 million or 50 cents per share in the first quarter of 2019, down around 78% from $169 million or $2.00 in the year-ago quarter. The bottom line in the reported quarter was hurt by lower methanol prices.

Adjusted earnings per share (barring one-time items) in the quarter were 73 cents, which beat the Zacks Consensus Estimate of 71 cents.

Revenues dropped roughly 24% year over year to $733 million in the quarter and missed the Zacks Consensus Estimate of $795 million.

Operational Highlights

Production for the quarter was 1,808,000 tons, down from 1,943,000 in the year-ago quarter. Total sales volumes were 2,723,000 tons, down around 3% year over year.

Average realized price for methanol was $331 per ton in the quarter, down from $402 per ton in the prior-year quarter. The decline was due to reduced average non-discounted posted prices across North America, Asia Pacific and Europe.

Financials

For the quarter, cash flow from operating activities was $213 million, down 13% year over year. The company had cash and cash equivalents of $285.1 million, down around 23% year over year.

Outlook

Moving ahead, Methanex expects methanol prices to be stable in the second quarter. It also expects its production levels to be lower on a sequential comparison basis in the second quarter. Moreover, the company expects adjusted EBITDA to be lower in the second quarter sequentially.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. The consensus estimate has shifted -21.21% due to these changes.

VGM Scores

At this time, Methanex has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Methanex has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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